With unemployment hovering above 9 percent and the whiff of recession in the air, many companies are keeping their expansion plans on hold. A select few, however, are expanding like mad.
A close look at the Forbes annual ranking of 100 best small public companies offers some hope on the dreary jobs front. During the previous three fiscal years, 84 of the 100 companies boosted payroll — by an average 48 percent — adding a total of 56,885 heads. A vast majority came aboard during the natural course of business, not via acquisition.
We drilled down further and found the 10 most powerful job creators of the bunch.
Leading the pack is Syntel, an information-technology-services outfit cofounded by Bharat Desai and his wife, Neerja Seth, who are worth $2.2 billion. Syntel has boosted headcount by 50 percent, or 6,310 jobs (none by acquisition), in the last three years. IT-services work tends to be more recession-proof than most; Syntel protects itself further by negotiating three-to-five year contracts, versus typical one-year arrangements.
While its competitors cut staff and reduced benefits, BJ’s Restaurants (the No. 2 most prolific employer), a casual pizza-pasta-sandwich chain, was busy revising floor layouts (dedicating more space to tables for two) and offering more cost-conscious items, like meatloaf and shareable desserts. The company opened 35 new restaurants over the last three years, expanding headcount by 41 percent. It plans to open 12 to 13 locations in 2011 and 15 in 2012.
Rackspace Hosting, which runs cloud-based servers for the likes General Electric and Delta Airlines, was the fourth most active employer. Since 2007 it has added nearly 1,700 Rackers, as its employees are called (most of those in the U.S.), to service 100,000 new clients during the same period. The hunt for talent doesn’t seem to be slowing, either: The RackerTalent career section of their website currently has 200 jobs to fill, many posted in the past three weeks. The company is mostly hiring Linux professionals at varying levels (network security is particular pain point), software developers, system engineers and sales folks, primarily to work at its headquarters in San Antonio, Texas.
One luxury goods retailer, True Religion (No. 8 on our list), has defied the austerity trend: Its jeans run between $168 and $376 a pair. Fancy denim demand has been so great that the company opened 79 branded stores in the last three years and hired an additional 1,300 employees.
HMS Holdings (No. 10) helps ameliorate the fiscal crisis of many state and local governments by helping them contain their healthcare costs. One example: In the second quarter of 2011, it helped New York State’s Office of the Medicaid Inspector General recover $65 million. According to the U.S. Department of Health and Human services, improper payments by Medicaid and Medicare programs totaled $70 billion in 2010. Two thirds of HMS’ top line comes from performance fees (it only gets paid if it helps clients reduce costs); the other third comes from service contracts — a stable, recurring revenue stream. Not only has HMS doubled its headcount since 2007, it knows what to do with those extra bodies: Profit per employee has risen 23 percent.
The members of the Forbes 100 best small public companies list had to be publicly traded for at least a year, pull in annual revenue between $5 million and $1 billion, and boast a stock price no lower than $5 a share. (For apples-to-apples comparisons we excluded financial institutions, REITs, utilities and limited partnerships.) The rankings are based on earnings growth, sales growth and return on equity in the past 12 months and over 5 years; we dropped thinly traded names and those with fuzzy accounting or major legal troubles. We also factored in stock performance versus each company’s peer group. Shares of last year’s 100 list members outpaced the Russell 2000 small-company index by an average of 10 percentage points.
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